10th Feb 2014 07:00
10 February 2014
Renewable Energy Generation Limited
("REG" or the "Group")
Interim Results for the six months to 31 December 2013
RENEWABLE ENERGY GENERATION REPORTS STRONG MOMENTUM IN WIND AND BIO-POWER BUSINESSES
Financial highlights
● | Group revenues of £5.7m (H1 2013: £6.5m) |
● | Profit before tax of £6.5m (H1 2013: loss of £1.7m) |
● | Sale of the 12MW Goonhilly Wind farm to BlackRock for an enterprise value of £25.1m and a profit of £9.4m to the Group |
● | Adjusted EBITDA1 after disposals of £9.6m (H1 2013: £1.4m) |
● | Unrestricted cash resources of £19.3m as at 31 December 2013 (H1 2013: £10.0m) |
● | Proposed interim dividend increased by 10% to 0.55p per ordinary share (H1 2013: 0.5p) |
Operational highlights
● | Wind output of 48.2GWh, ahead of expected levels for the period |
● | Commencement of construction of the 4.5MW Goonhilly solar farm |
● | Planning permission issued for Ramsey II wind farm |
● | Conditional turbine supply agreements with Vestas Celtic Wind Technology for the 10MW St Breock and 8MW Ramsey II wind farms |
● | Acquisition of 4MW Rodbaston College wind farm planning permission |
● | Project financing completed for 4MW Orchard End wind farm |
● | Circa 140MW of applications across 15 wind projects awaiting determination in the UK planning system |
Post period end events
● | Construction contract signed for 18MW bio-power plant in Selby, Yorkshire |
● | Planning permission for the extension of French Farm to 12MW |
¹ Earnings before interest, taxation, depreciation and amortisation ("EBITDA") is equal to the Group's continuing operating profit before exceptional items, share based payments, interest, taxation, depreciation and amortization and including profit on disposal of subsidiaries.
Andrew Whalley, REG Chief Executive Officer said:
"The sale of Goonhilly Wind Farm to our strategic partner BlackRock further demonstrates the value of our well-managed wind farm portfolio.
"We have also progressed energetic projects at St Breock and Ramsey into construction during the period and our development team continues to deliver planning permissions.
"I am delighted to report our collaboration with Caterpillar and Finning to deliver our 18MW Whitemoor plant, which will be powered by our patented bioliquid. This represents a huge step forward for our biopower arm and will enable it to play a significant role in the growing STOR market."
A presentation to analysts will be held today at the offices of Broker Profile at 9.30 am. The address is Augustine House, 6A Austin Friars, London, EC2N 2HA.
ENDS
Enquiries:
Renewable Energy Generation Limited Andrew Whalley, Chief Executive Officer David Crockford, Finance Director Ian Lawrence, Communications Manager
| +44 (0)1483 901 790 |
Smith & Williamson Corporate Finance Limited (Nominated Adviser) Martyn Fraser
| +44 (0)117 376 2213 |
Cenkos (Corporate Broker) Bobbie Hilliam
| +44 (0)20 7397 8900 |
Broker Profile Simon Courtenay / Tamsin Shephard | +44 (0)20 7448 3244 |
Notes to editors
Renewable Energy Generation Ltd (REG) is a UK renewable energy group. Its main business is the development, construction and operation of wind farms and generating power from refined used cooking oil.
REG Windpower: based in Truro, Bath and Guildford, UK, it currently operates 14 wind projects in Cambridgeshire, Cornwall, County Durham, Yorkshire, Lancashire, Cumbria and Gwynedd, with a total capacity of 67.15MW and has a development pipeline of over 1,000MW.
REG Bio-Power UK Ltd: based in Nottingham, UK: it operates electricity generation plant powered by fuel recovered from used cooking oil.
Headquartered in Jersey, REG was admitted to trading on AIM, a market operated by the London Stock Exchange, in May 2005 (AIM: WIND).
www.renewableenergygeneration.co.uk
Overview of the Period
REG's growth strategy remains to recycle value from selected disposals within its renewable asset portfolio to fund a sizeable investment in its operational wind, solar and bio-power projects.
Operational Progress
Following on from the sale of 16MW of wind farms last financial year under our framework agreement with BlackRock, the Group made a further disposal of its 12MW Goonhilly Downs operating project for a total enterprise value of £25.1m under the agreement. This resulted in upfront cash consideration of £10.7m and profits of £9.4m. The funds received will be reinvested in to the Group's asset development and construction pipeline. An asset management agreement has been agreed with BlackRock, allowing REG to continue to manage the site and benefit from a recurring asset management fee.
The 10MW St Breock repowering and 8MW Ramsey II projects commenced construction with the signing of conditional turbine supply agreements with Vestas. The projects are expected to become operational towards the end of the calendar year, with a combined output of 55.4GWh per annum.
The construction of the 4.5MW Goonhilly Solar PV project commenced in the period, with commercial operation targeted for Spring 2014. The project represents REG's first interest in the solar sector, and is expected to lead to further sites and opportunities in the coming years.
Acquisition
In October, REG acquired a consented wind project located at the Rodbaston campus, near Penkridge, Staffordshire. The project will comprise two 2MW turbines and is expected to deliver 11GWh of clean electricity per annum. Under the terms of the agreement, REG will support the College's educational programme by providing access to the turbine and will make annual lease payments to the College for the duration of the project.
Bio-Power
Following the period end, we announced our collaboration with Finning and Caterpillar Financial over the 18MW Whitemoor bio-power plant to be constructed in Selby, Yorkshire. We are delighted to be procuring engines from the world's largest diesel engine manufacturer to build the Whitemoor project with Caterpillar Financial providing long-term debt finance.
We believe the standby generation market will grow strongly, a result of the closure of older electricity generation plant leading to greater variability on the UK grid. REG is in a strong position to participate in this growth, utilising its proven, clean renewable energy technology.
Wind Portfolio Development
On 5 February, we announced that Peterborough City Council's planning committee resolved to grant planning permission for an extension to our French Farm wind farm project. Construction of four new turbines in addition to the existing two turbine planning permission at French Farm will deliver a 12MW wind farm with an anticipated annual energy output of 28.5GWh, making it one of REG's most productive wind farms. Formal planning permission is expected to follow shortly and subject to the expiry of the six week legal challenge period, the project is expected to enter construction later this year.
Community Debenture Funding
We announce for the first time a new financing opportunity for the Group with the launch of a community based debenture for direct investment in to our High Down wind farm. The debenture, to be launched with Abundance Generation, allows the general public to invest directly in a 20 year debenture product that shares in the operating surpluses generated by this feed-in-tariff wind turbine.
The Group considers the area of community involvement and ownership a key driver in the continued growth of the onshore wind sector, and as such expects to encourage further direct investment from communities in future REG wind projects.
Dividend
Reflective of the Board's confidence in the positive outlook for the Group, it has resolved to increase the interim dividend by 10% to 0.55p per share. The dividend will be paid on 11 April 2014 to shareholders on the register as at 21 March 2014.
Unaudited interim consolidated income statement
For the six months to 31 December 2013
Six months to 31 December 2013 | Six months to 31 December 2012 | Year to 30 June 2013 | ||
£'000 | £'000 | £'000 | ||
(unaudited) | (unaudited) | (audited) | ||
Revenue | 5,660 | 6,466 | 13,406 | |
Cost of Sales | (3,723) | (3,714) | (7,675) | |
Gross profit | 1,937 | 2,752 | 5,731 | |
Central administrative expenses | (870) | (1,077) | (1,661) | |
Bio-power administrative expenses | (297) | (281) | (613) | |
Wind administrative expenses | (1,812) | (1,340) | (3,524) | |
Development costs | (658) | (411) | (1,350) | |
Corporate finance costs | (180) | (501) | - | |
Other operating income | - | 20 | - | |
Group operating loss from continuing activities | (1,880) | (838) | (1,417) | |
Profit on disposal of subsidiaries (note 5) | 9,375 | - | 9,116 | |
Net finance cost | (1,040) | (866) | (1,870) | |
Profit / (loss) on continuing operations before tax | 6,455 | (1,704) | 5,829 | |
Tax | - | 200 | 685 | |
Profit / (loss) on continuing operations after tax | 6,455 | (1,504) | 6,514 | |
Attributable to | ||||
Equity holders of the parent | 6,455 | (1,504) | 6,514 | |
Non controlling interest | - | - | - | |
Total | 6,455 | (1,504) | 6,514 | |
(Loss) / earnings per share attributable to the equity holders of the Company during the period | |||||
- basic EPS/(LPS) | 6.23p | (1.46p) | 6.30p | ||
- diluted EPS/(LPS) | 6.10p | (1.46p) | 6.20p | ||
Unaudited interim consolidated balance sheet
As at 31 December 2013
31 December 2013 | 31 December 2012 | 30 June 2013 | ||
£'000 | £'000 | £'000 | ||
ASSETS | (unaudited) | (unaudited) | (audited) | |
Non-current assets | ||||
Goodwill (note 3) | 7,390 | 7,390 | 7,390 | |
Development assets (note 3) | 14,308 | 9,476 | 13,907 | |
Property, plant and equipment (note 4) | 44,496 | 53,758 | 41,576 | |
Deferred tax asset | 1,664 | 1,278 | 1,664 | |
67,858 | 71,902 | 64,537 | ||
Current Assets | ||||
Assets classified as held for sale | 8,108 | 19,978 | 22,808 | |
Inventories | 628 | 271 | 419 | |
Trade and other receivables | 3,212 | 2,891 | 4,359 | |
Intangibles | 2,087 | 2,208 | 2,238 | |
Restricted cash | 3,619 | 6,107 | 8,229 | |
Cash and cash equivalents | 19,262 | 9,924 | 16,059 | |
Derivative financial instruments | - | - | 47 | |
36,916 | 41,379 | 54,159 | ||
Total assets | 104,774 | 113,281 | 118,696 | |
| ||||
LIABILITIES | ||||
Current liabilities | ||||
Trade and other payables | 4,061 | 4,196 | 10,913 | |
Liabilities directly associated with assets classified as held for sale | 4,246 | 9,482 | 15,981 | |
Borrowings | 997 | 1,760 | 860 | |
9,304 | 15,438 | 27,754 | ||
Non-current liabilities | ||||
Borrowings | 17,087 | 32,082 | 17,849 | |
Derivative financial instruments | 620 | 3,233 | 1,196 | |
Deferred tax liabilities | 319 | - | 124 | |
18,026 | 35,315 | 19,169 | ||
Total liabilities | 27,330 | 50,753 | 46,923 | |
EQUITY | ||||
Share capital | 10,366 | 10,330 | 10,345 | |
Share premium | 79,912 | 79,707 | 79,792 | |
Own shares | (197) | - | (60) | |
Share based payment reserve | 438 | 1,465 | 338 | |
Hedging reserve | (466) | (2,867) | (1,130) | |
Retained earnings | (13,159) | (26,657) | (18,062) | |
Equity attributable to the equity holders of the parent | 76,894 | 61,978 | 71,223 | |
Non controlling interest | 550 | 550 | 550 | |
Total equity and liabilities | 104,774 | 113,281 | 118,696 | |
| ||||
Unaudited interim consolidated cash flow statement
For the six months to 31 December 2013
Six months to 31 December 2013 | Six months to 31 December 2012 | Year to 30 June 2013 | |
£'000 | £'000 | £'000 | |
(unaudited) | (unaudited) | (audited) | |
Cash flows from operating activities | |||
Net cash generated/(used) in operations | (1,148) | 1,509 | 3,665 |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (8,788) | (6,252) | (10,370) |
Capitalised development costs | (2,022) | (1,991) | (6,080) |
Business combinations | - | - | (229) |
Net proceeds from sale of subsidiary | 9,080 | - | 12,729 |
Interest received | - | - | 125 |
Movement in restricted cash accounts | 3,686 | 1,739 | (665) |
Net cash generated/(used) in investing activities | 1,956 | (6,504) | (4,490) |
Cash flows from financing activities | |||
New borrowings net of issue costs | 3,795 | 8,809 | 14,724 |
Interest paid | (759) | (948) | (2,272) |
Repayment of borrowings | (462) | (680) | (1,535) |
Purchase of own shares | (137) | - | (60) |
Issue of shares | 36 | - | - |
Dividends paid to Company's shareholders | (1,552) | (1,549) | (2,065) |
Net cash generated from financing activities | 921 | 5,632 | 8,792 |
Net increase in cash and cash equivalents | 1,729 | 637 | 7,967 |
Cash at beginning of period | 17,533 | 9,566 | 9,566 |
Cash at end of period | 19,262 | 10,203 | 17,533 |
Unaudited statement of comprehensive income
For the six months to 31 December 2013
Six months ended 31 December 2013 | Six months ended 31 December 2012 |
Year ended 30 June 2013 | |
£'000 | £'000 | £'000 | |
(unaudited) | (unaudited) | (audited) | |
Profit / (loss) for the period | 6,455 | (1,504) | 6,514 |
Effective portion of change in fair value cash flow hedges net of recycling | 664 | (722) | 1,015 |
Total comprehensive income / (expenditure) for the period net of tax | 7,119 | (2,226) | 7,529 |
Attributable to | |||
Equity holders of the parent | 7,119 | (2,226) | 7,529 |
Non controlling interest | - | - | - |
Total | 7,119 | (2,226) | 7,529 |
Unaudited interim consolidated statement of changes in equity
For the six months to 31 December 2013
Share capital |
Share premium account |
Own shares | Share based paymentsreserve |
Hedging reserve |
Retained earnings | Non controlling interest | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 July 2013 | 10,345 | 79,792 | (60) | 338 | (1,130) | (18,062) | 550 | 71,773 |
Total comprehensive income | - | - | - | - | 664 | 6,455 | - | 7,119 |
Share based payments | - | - | - | 100 | - | - | - | 100 |
Dividend (note 2) | - | - | - | - | - | (1,552) | - | (1,552) |
Issue of new equity | 21 | 120 | - | - | - | - | - | 141 |
Purchase of own shares | - | - | (137) | - | - | - | - | (137) |
At 31 December 2013 | 10,366 | 79,912 | (197) | 438 | (466) | (13,159) | 550 | 77,444 |
Notes to the unaudited interim consolidated financial statements
1. Statement of compliance
While the financial information included in this unaudited interim financial statement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRS.
This interim financial statement has been prepared on the basis of accounting policies adopted by the Group and set out in the annual report and accounts for the year ended 30 June 2013. The Group does not anticipate any change in these accounting policies for the year ended 30 June 2014. As permitted, this interim report has been prepared in accordance with the AIM rules and not in accordance with IAS 34 "Interim financial reporting".
2. Dividends
Six months to31 December 2013 | Six months to31 December 2012 | Year to30 June 2013 | |
Declared and paid during the period onordinary equity shares | £'000 | £'000 | £'000 |
(unaudited) | (unaudited) | (audited) | |
Final dividend declared and paid | 1,552 | 1,549 | 1,549 |
Interim dividend declared and paid | - | - | 516 |
1,549 | 2,065 | ||
Proposed but not recognised as a liability at 31 December 2013 | |||
Equity dividends on ordinary shares: | |||
Interim dividend declared and paid - 0.55p (2012 - 0.5p) | 570 | 516 | - |
The dividend will be paid on 11 April 2014 to members on the register on 21 March 2014. Shares will be marked ex-dividend on 19 March 2014.
3. Intangible assets
(unaudited) | Development costs | Goodwill | Total |
£'000 | £'000 | £'000 | |
Cost | |||
At 1 January 2013 | 10,264 | 7,390 | 17,654 |
Additions | 5,396 | - | 5,396 |
At 30 June 2013 | 15,660 | 7,390 | 23,050 |
Additions | 2,136 | - | 2,136 |
Transfers to property, plant and equipment | (1,244) | - | (1,244) |
At 31 December 2013 | 16,552 | 7,390 | 23,942 |
Amortisation and impairment | |||
At 1 January 2013 | 788 | - | 788 |
Impairment charge | 965 | - | 965 |
At 30 June 2013 | 1,753 | - | 1,753 |
Impairment charge | 491 | - | 491 |
At 31 December 2013 | 2,244 | - | 2,244 |
Net book value | |||
At 31 December 2013 | 14,308 | 7,390 | 21,698 |
At 30 June 2013 | 13,907 | 7,390 | 21,297 |
At 1 January 2013 | 9,476 | 7,390 | 16,866 |
Included within additions to development costs are internal development costs of £250,000 (2013: £200,000).
4. Property, plant and equipment
(unaudited) | Operating wind sites | Other generation plant | Assets in the courseofconstruction | Freehold land | Fixtures, fittings and equipment | Total |
£000 | £000 | £000 | £000 | £000 | £000 | |
Cost | ||||||
At 1 January 2013 | 50,024 | 5,629 | 5,318 | 1,252 | 1,994 | 64,217 |
Additions | 643 | 119 | 7,969 | - | 280 | 9,011 |
Movements | 13,287 | - | (13,287) | - | - | - |
Assets classified as held for sale | (1,342) | - | - | - | - | (1,342) |
Disposals | (19,998) | - | - | - | - | (19,998) |
At 30 June 2013 | 42,614 | 5,748 | - | 1,252 | 2,274 | 51,888 |
Additions | (240) | 50 | 3,506 | - | 209 | 3,525 |
Transfers from Development costs | - | - | 1,244 | - | - | 1,244 |
Assets classified as held for sale | (375) | - | - | - | - | (375) |
At 31 December 2013 | 41,999 | 5,798 | 4,750 | 1,252 | 2,483 | 56,282 |
Depreciation | ||||||
At 1 January 2013 | 9,108 | 669 | - | - | 682 | 10,459 |
Depreciation charge | 1,269 | 230 | - | - | 134 | 1,633 |
Assets classified as held for sale | (1,607) | - | - | - | - | (1,607) |
Disposals | (173) | - | - | - | - | (173) |
At 30 June 2013 | 8,597 | 899 | - | - | 816 | 10,312 |
Depreciation charge | 1,173 | 138 | - | - | 163 | 1,474 |
At 31 December 2013 | 9,770 | 1,037 | - | - | 979 | 11,786 |
Net book value | ||||||
At 31 December 2013 | 32,229 | 4,761 | 4,750 | 1,252 | 1,504 | 44,496 |
At 30 June 2013 | 34,017 | 4,849 | - | 1,252 | 1,458 | 41,576 |
At 1 January 2013 | 40,916 | 4,960 | 5,318 | 1,252 | 1,312 | 53,758 |
During the period an amount of £45,000 (2012 - £414,000) of borrowing costs were capitalised into assets in the course of construction. Capitalisation of borrowing costs has increased as a result of new additions being funded from debt.
5. Disposal of subsidiary
2013 | |
£'000 | |
(unaudited) | |
Proceeds* | 25,165 |
Assignment of project debt | (14,488) |
Unrestricted cash included in disposal group | (1,893) |
Fees | (154) |
Net proceeds | 8,630 |
Net liabilities of disposal group | 745 |
Profit on disposals | 9,375 |
*Includes £200,000 deferred consideration.
£650,000 deferred consideration in respect of the sale of South Sharpley and Sancton Hill in the prior year was received during the period.
Related Shares:
WIND.L